Key Takeaways
- • South Korea's venture industry is demanding a complete government review of the planned KOSDAQ tiered system scheduled for implementation in H2 2026, citing concerns that rigid evaluation criteria will stigmatize high-growth innovative companies with current losses as "non-prime" firms.
- • Korea Venture Business Association Chairman Song Byung-joon warned at a June 10 press conference that the tiered system could distort capital allocation, disadvantage deep-tech firms, and potentially drive startups toward overseas listings or abandoned IPO plans.
- • The venture industry identified growing ecosystem polarization, with policy funding increasingly concentrated in AI and deep-tech sectors while traditional industries including biotech, materials, and advanced manufacturing face funding shortages.
- • The association is demanding exemptions from South Korea's 52-hour workweek regulations for core R&D personnel and plans to present detailed policy alternatives at a joint forum scheduled for June 15.
Summary
South Korea's venture capital industry launched a formal challenge to the government's planned introduction of a tiered system for the KOSDAQ market in the second half of 2026. The Korea Venture Business Association, led by Chairman Song Byung-joon (who also serves as board chairman of Com2uS), held a press conference on June 10 at Seoul's Kensington Hotel to formally announce opposition to the regulatory initiative and demand a comprehensive government review.
The core concern centers on the mechanics of the proposed tiered system. The venture industry argues that uniform evaluation criteria based on revenue and profit metrics would unfairly categorize innovative companies with high future growth potential but current operating losses as "non-prime" firms. Industry representatives fear this classification would function as a "scarlet letter," creating a stigma that undermines the market positioning and capital-raising prospects of legitimate growth-stage startups. The association characterized the tiered system, combined with tightened delisting requirements and dual-listing regulations intended to revitalize KOSDAQ, as insufficiently flexible given the unique operational characteristics of venture-backed companies.
Beyond the tiered system itself, the venture industry highlighted a structural problem in South Korea's startup funding landscape: growing polarization driven by concentrated policy capital. According to the association's analysis, government and institutional funding flows are increasingly concentrated in artificial intelligence and deep-tech sectors, leaving traditional venture segments—including biotech, advanced materials, and manufacturing—facing significant funding shortages. This concentration threatens ecosystem diversity and may reduce overall innovation output across multiple sectors.
The association also raised labor regulation concerns, demanding exemptions from South Korea's 52-hour workweek restrictions for core research and development personnel. The group plans to present detailed policy alternatives at a joint forum scheduled for June 15, signaling an intention to engage constructively with policymakers while maintaining pressure for meaningful revisions to the proposed regulatory framework.
The core concern centers on the mechanics of the proposed tiered system. The venture industry argues that uniform evaluation criteria based on revenue and profit metrics would unfairly categorize innovative companies with high future growth potential but current operating losses as "non-prime" firms. Industry representatives fear this classification would function as a "scarlet letter," creating a stigma that undermines the market positioning and capital-raising prospects of legitimate growth-stage startups. The association characterized the tiered system, combined with tightened delisting requirements and dual-listing regulations intended to revitalize KOSDAQ, as insufficiently flexible given the unique operational characteristics of venture-backed companies.
Beyond the tiered system itself, the venture industry highlighted a structural problem in South Korea's startup funding landscape: growing polarization driven by concentrated policy capital. According to the association's analysis, government and institutional funding flows are increasingly concentrated in artificial intelligence and deep-tech sectors, leaving traditional venture segments—including biotech, advanced materials, and manufacturing—facing significant funding shortages. This concentration threatens ecosystem diversity and may reduce overall innovation output across multiple sectors.
The association also raised labor regulation concerns, demanding exemptions from South Korea's 52-hour workweek restrictions for core research and development personnel. The group plans to present detailed policy alternatives at a joint forum scheduled for June 15, signaling an intention to engage constructively with policymakers while maintaining pressure for meaningful revisions to the proposed regulatory framework.
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